July 10 (Bloomberg) -- Stocks from U.S. to Europe slid as
increasing concern over signs of financial stress in Portugal
sent investors seeking safety in Treasuries, the yen and gold.

The Standard & Poor’s 500 Index fell 0.4 percent at 4 p.m.
in New York, paring an earlier drop of as much as 1 percent. The
Russell 2000 Index of smaller companies declined 1 percent. The
Stoxx Europe 600 Index tumbled 1.1 percent to the lowest since
May. Portugal’s 10-year bond yield jumped 21 basis points to
3.97 percent. Treasury 10-year rates slid one point to 2.54
percent, the yen advanced against all of its 16 major peers and
gold added 1.1 percent. Oil rose for the first time in 10 days.

Bonds of Europe’s most-indebted nations slumped as
speculation resurfaced that the euro region remains vulnerable
to shocks as it emerges from the sovereign debt crisis. U.S.
equities resumed declines after a two-day selloff earlier this
week led by Internet and small-cap stocks. The value of global
equities climbed to a record $66 trillion last week, data
compiled by Bloomberg show.

“People will shoot first and ask questions later when news
like this hits,” said Lawrence Creatura, a fund manager at
Federated Investors Inc. in Rochester, New York. His firm
manages about $363.8 billion. “The concern of an event like
this is always determining whether it’s occurring in isolation
or whether it’s the first domino. It’s a classic flight to
safety across the equity, commodities and bond markets.”

‘Severe’ Pullback

Speculation that U.S. stocks have risen too far, too fast
fueled losses earlier in the week as Raymond James & Associates
Inc. said equities are vulnerable and Citigroup Inc.’s chief
U.S. equity strategist cited concerns for a “severe” pullback.
The Russell 2000 is down 3.8 percent for the week, poised for
its worst weekly decline in two years, while the S&P 500 has
retreated 1.1 percent, the most since April.

U.S. benchmark indexes ended last week at all-time highs,
with the Dow topping 17,000 for the first time, as the latest
government payrolls report showed job growth blew past
expectations last month and the unemployment rate fell to the
lowest level since before the financial crisis peaked six years
ago.

The S&P 500 has not had a drop of 10 percent in more than
two years. The gauge trades at a valuation of 18 times reported
earnings, the highest since 2011 when it was in the middle of a
19 percent slide, its biggest during the current five-year bull
market.

The Chicago Board Options Exchange Volatility Index
finished last week at a seven-year low before rallying 16
percent during the first two days of the week, the biggest surge
since April. The gauge known as the VIX rose 8 percent to 12.58
today.

Trimming Losses

“Everyone expected the worst, and the contagion fears were
brought back to fruition, but as the day has gone on those fears
have abated a bit,” Bill Schultz, who oversees $1.2 billion as
chief investment officer at McQueen, Ball & Associates in
Bethlehem, Pennsylvania, said in a phone interview. “Right now
the market is saying that their concerns are not going to be as
widespread as they were when they walked in this morning.”

Home Depot Inc. and Lowe’s Cos. fell at least 1.4 percent
after a Deutsche Bank AG analyst lowered his estimates for their
profits based on weak results at rivals. Shares in high-dividend
yielding companies such as Verizon Communications Inc. advanced.

Fed Minutes

The S&P 500 rebounded 0.5 percent from a two-day selloff
yesterday as optimism over corporate earnings and jobs growth
outweighed Federal Reserve concern that investors may be growing
complacent about risk.

Minutes of the Fed’s June meeting, released yesterday,
showed officials have agreed they’ll end their asset-purchase
program in October if the economy holds up. At the same time,
the policy makers said the central bank should continue to
support favorable financial conditions needed to sustain growth,
according to the minutes.

A report today showed fewer Americans than forecast filed
applications for unemployment benefits last week, a sign the job
market continues to strengthen.

More than 140 companies in the S&P 500, including Citigroup
Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Johnson
& Johnson, will report quarterly results between now and July
23, according to data compiled by Bloomberg.

Earnings Season

Profit at S&P 500 companies probably rose 5 percent in the
three months through June, while sales gained 3 percent,
estimates show. The forecasts have decreased from the start of
April, when analysts predicted a 7.3 percent jump in earnings
and 3.7 percent sales increase.

U.S. debt pared gains as the Treasury sold $13 billion of
30-year bonds at a yield of 3.369 percent, the lowest auction
yield since June 2013, and compared with a forecast of 3.372
percent in a Bloomberg News survey of seven of the Fed’s 22
primary dealers. The yield on the current 30-year bond fell less
than one basis point to 3.37 percent. The rate on the 10-year
note touched a one-month low earlier in the day.

While Portugal’s central bank said Banco Espirito Santo SA,
the nation’s second-largest lender, is protected after its
parent missed debt payments, Moody’s Investors Service
downgraded a company in the group citing a lack of transparency
and links to other companies.

Financial Impact

Banco Espirito Santo tumbled 17 percent before the
Portuguese securities regulator said it stopped trading in the
shares pending an announcement. Espirito Santo Financial Group
SA, which owns 25 percent of the lender, fell 8.9 percent before
the company suspended trading earlier in stocks and bonds,
saying it’s “currently assessing the financial impact of its
exposure” to Espirito Santo International, which has missed
payments on short-term paper.

Greece’s five-year note yield increased 12 basis points
4.33 percent. The government sold 1.5 billion euros of three-year notes via banks, priced to yield 3.5 percent. That’s higher
than forecasts earlier this week for a rate of about 3 percent
from HSBC Holdings Plc and Royal Bank of Scotland Group Plc.

The Stoxx 600 fell 1.1 percent, extending its loss for the
week to 3.3 percent, which would be the largest weekly decline
in more than a year. About seven shares declined for every one
that advanced in the Stoxx 600, with trading volumes 52 percent
higher than the 30-day average, according to data compiled by
Bloomberg. A gauge of banks tumbled 1.7 percent to the lowest
since Dec. 18.

European Stocks

Banco Popular Espanol SA dropped 2 percent. The Spanish
lender said it postponed a planned issue of the riskiest bank
debt because of “heightened volatility” in credit markets.

The yen strengthened 0.3 percent to 101.33 per dollar and
gained 0.6 percent to 137.85 per euro. The euro snapped a three-day climb versus the dollar, falling 0.3 percent to $1.3605.

Gold futures jumped 1.1 percent to $1,339.20 an ounce, the
highest since March 21. The metal has climbed 11 percent this
year, outpacing gains for indexes of commodities, equities and
Treasuries. After shunning the metal in 2013, investors are once
again adding to holdings through exchange-traded products and
seeking safety as turmoil spreads in the Middle East and Eastern
Europe.

Oil Demand

Oil snapped a nine-day decline, the longest losing streak
since 2009. WTI gained 0.6 percent to $102.93 a barrel. Oil
demand rose to a one-month high in the four weeks ended July 4,
government data showed yesterday.

Indonesian stocks climbed to a one-year high as polls
showed Jakarta’s Governor Joko Widodo won the presidency. The
Jakarta Composite Index added 1.4 percent to 5,095.20, heading
for its highest close since May 2013.